CVS stores failed to redeem customers’ cans and bottles, and the chain faces $3.6-million penalty

Seeking to pressure retailers to accept recyclable containers from consumers, the state of California has proposed a $3.6-million penalty against the CVS pharmacy chain after dozens of its stores declined to redeem cans and bottles.

An investigation by the California Department of Resources Recycling and Recovery found that 81 of CVS Pharmacy’s more than 800 locations in California failed to collect empty cans and bottles and to pay the 5-cent and 10-cent redemption fees due to consumers. The stores also did not pay the $100-a-day fee required of retailers that don’t offer redemption, the agency known as CalRecycle announced Monday.

The penalty is by far the largest ever proposed by the state agency and comes as California is struggling to provide enough recycling centers to serve residents, following the shrinking of foreign markets for recyclables and the August closure of the state’s biggest recycling redemption operator.

The action against CVS “sends a message that we will hold retailers accountable for refunding consumers their nickel and dime recycling deposits,” said Jared Blumenfeld, state secretary of environmental protection.

CVS did not immediately reply to a request for comment. The nation’s largest pharmacy chain can request an evidentiary hearing into the allegations.

The CalRecycle action involves CVS stores from the San Francisco Bay Area to San Diego. The agency found that 81 stores did not pay California redemption value, or CRV, refunds to consumers and did not pay the $100 daily fee.

The giant retailer, which controls more than a quarter of the retail pharmacy market in America, had not paid the fees at some stores dating to 2017, CalRecycle said. It intends to charge CVS for a total of 18,290 days of unpaid fees over more than two years, for a total of more than $1.8 million. The charge against the company would be doubled by more than $1.8 million in civil penalties.

CVS became a high priority for the recycling agency because it owed more in fees and penalties than any other company, CalRecycle spokesman Lance Klug said.

“This action comes after multiple contacts with CVS failed to resolve the issue,” Klug said in an email.

California passed the CRV law in 1986, attaching 5-cent charges to most beverage containers, with a dime charge for containers holding more than 24 fluid ounces. The law intended that the fees be repaid to customers when they return cans and bottles made of plastic, aluminum or glass.

Recycling centers handled most of the recycling the first years of the law, and Californians responded by returning more than 80% of their containers. But the return rate declined after the secondary market for cans and bottles withered — most notably this year when China said it would no longer take most of America’s recyclables. That, in turn, led to economic trouble for American recycling companies. In August, RePlanet shut down 284 locations, costing California about one-fifth of its recycling redemption centers.

That left retailers as the recycler of last resort for many consumers. But many stores are not set up to receive and process cans and bottles. Some operators seem unaware of their obligation to take the containers if there is no recycler within half a mile.

An audit by Consumer Watchdog in April suggested widespread noncompliance with the redemption law. Two-thirds of the 50 grocery, convenience and drug stores the consumer group audited in the Los Angeles area would not take containers and issue refunds.

Consumer Watchdog criticized CalRecycle for being too slow to penalize stores that didn’t follow the law. In the five years between 2014 and March of this year, the agency levied only $104,750 in charges against 238 stores, Consumer Watchdog said.

“It’s a new day for recycling, but it’s been a long time coming,” Consumer Watchdog President Jamie Court said of the CVS action. “Now the message has to be heard across the industry.”

Mark Murray, executive director of Californians Against Waste, said the CalRecycle action showed it had been diligently pursuing noncompliant stores all along. “They clearly have been working on this for some time and pursuing enforcement, as the law provides,” Murray said.

CalRecycle spokesman Klug said the agency has increased enforcement since the RePlanet shutdown made recycling less convenient. The agency has conducted 2,180 inspections of retailers since August, some at random and some based on complaints from customers.

The agency encouraged shoppers to report stores that refuse to redeem their cans and bottles by calling (800) RECYCLE, or (800) 732-9253.